The Shanghai Composite Index retreated 0.9 percent, weighed down by expectations the United States will impose more tariffs on Chinese goods this month, adding to pressure on China's cooling economy.

Indonesian stocks slumped more than 3 percent as the rupiah currency wobbled around its lowest levels since the Asian financial crisis in 1998. The central bank said it had "decisively intervened" in FX and bond markets in morning trade.

Sentiment in Asia was already weak after U.S. stocks slipped overnight, with a drop in heavyweights Facebook and Nike adding to worries over trade negotiations between the United States and other major economies.

"The U.S.-Canada talks are due to resume today and this keeps trade issues at the forefront, with a wait-and-see mood prevailing in the equity markets," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.

Discussions between the United States and Canada were expected to resume on Wednesday after the last round ended on Friday with no deal to revamp the North American Free Trade Agreement (NAFTA), cooling investor confidence.

Ottawa is not expected to back down on key issues despite threats from U.S. President Donald Trump to retaliate against the Canadian economy.

"Then there is the U.S.-China trade issue, in addition to turbulence in the emerging market currencies that the markets have to worry about," Ichikawa at Sumitomo Mitsui Asset Management said.

Keeping investors nervous is the threat of fresh U.S tariffs on another $200 billion worth of Chinese goods that could take effect after a public comment period ends on Thursday.

Wobbly emerging markets stocks and currencies, a key source of recent global market angst, faced their latest round of pressure with news that South Africa had slipped into recession and concerns brewing about inflation in Turkey.

Argentina's peso finished the day down over 2 percent on Tuesday. The peso fell even though U.S. President Trump voiced support for Argentine President Mauricio Macri and his efforts to win IMF financing in the wake of a deepening economic crisis.

Argentine Economy Minister Nicolas Dujovne met International Monetary Fund (IMF) chief Christine Lagarde in Washington on Tuesday and both said they were working to improve a $50 billion standby finance deal agreed with the IMF in June.

"If a larger credit line from the IMF is not forthcoming, then in an environment of rising dollar and U.S. interest rates it is hard to see where the relief will come from for the Argentine peso -and indeed other emerging market currencies with twin deficits and high levels of USD-denominated debt," wrote currency strategists at Rabobank.

With investors avoiding emerging market currencies, the dollar was supported thanks to its safe-haven appeal.

The greenback extended its overnight rise against the yen to touch a near one-week high of 111.71 yen.

The dollar index, which measures the greenback against a basket of six currencies, was a touch lower at 95.359 but in close reach of a two-week high of 95.737 set on Tuesday.

The euro inched up 0.1 percent to $1.1594 following a loss of 0.35 percent on Tuesday.

The dollar had also drawn strength on Tuesday from upbeat U.S. indicators supporting the case for further interest rate hikes by the Federal Reserve.

Data on Tuesday showed U.S. manufacturing activity accelerated to more than a 14-year high in August, boosted by a surge in new orders.

The Australian dollar was up 0.2 percent at $0.7190 following stronger-than-expected domestic second quarter GDP data. The Aussie managed to pull away from $0.7157, its lowest since May 2016 plumbed on Tuesday.

China's yuan was a shade firmer in onshore trading at 6.8365 per dollar after losing 0.25 percent the previous day.